Statistics for Business and Economics (13e)
                         Chapter 14, Part A: Simple Linear Regression
                         •        Simple Linear Regression Model
                         •        Least Squares Method
                         •        Coefficient of Determination
                         •        Model Assumptions
                         •        Testing for Significance
                       © 2017 Cengage Learning.  May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or                                2
                       otherwise on a password-protected website or school-approved learning management system for classroom use..
                                                                                                                                                                                     Statistics for Business and Economics (13e)
                         Simple Linear Regression
                         •        Managerial decisions often are based on the relationship between two or 
                                  more variables.
                         •        Regression analysis can be used to develop an equation showing how the 
                                  variables are related.
                         •        The variable being predicted is called the dependent variable and is denoted 
                                  by y.
                         •        The variables being used to predict the value of the dependent variable are 
                                  called the independent variables and are denoted by x.
                       © 2017 Cengage Learning.  May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or                                3
                       otherwise on a password-protected website or school-approved learning management system for classroom use..
                                                                                                                                                                                     Statistics for Business and Economics (13e)
                         Simple Linear Regression
                         •          Simple linear regression involves one independent variable and one 
                                    dependent variable.
                         •          The relationship between the two variables is approximated by a 
                                    straight line.
                         •           Regression analysis involving two or more independent variables is 
                                     called multiple regression.
                       © 2017 Cengage Learning.  May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or                                4
                       otherwise on a password-protected website or school-approved learning management system for classroom use..
                                                                                                                                                                                     Statistics for Business and Economics (13e)
                         Simple Linear Regression Model
                         •        The equation that describes how y is related to x and an error term is called 
                                  the regression model.
                            •        The simple linear regression model is:
                                                                                                                               y = b  + b x + e
                                                                                                                                               0             1
                                                                     where:
                                                                                    b  and b  are called parameters of the model. 
                                                                                            0                     1
                                                                                    e  is a random variable called the error term.
                       © 2017 Cengage Learning.  May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or                                5
                       otherwise on a password-protected website or school-approved learning management system for classroom use..
                                                                                                                                                                                     Statistics for Business and Economics (13e)
                         Simple Linear Regression Equation
                         •        The simple linear regression equation is:
                                                                                                                                 E(y) = 0 + 1x
                                       •        Graph of the regression equation is a straight line.
                                       •       b is the y intercept of the regression line.
                                                    0
                                       •       b is the slope of the regression line.
                                                    1
                                       •       E(y) is the expected value of y for a given x value.
                       © 2017 Cengage Learning.  May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or                                6
                       otherwise on a password-protected website or school-approved learning management system for classroom use..